Pepperstone is regulated by top-tier regulators, such as the FCA in the UK. At the same time, the company is not listed on any exchange, does not disclose financial information and does not have a bank parent.
|• Majority of clients belong to a top-tier financial authority||• Does not hold a banking license|
|• Negative balance protection for most clients||• Not listed on stock exchange|
|• Financial information is not publicly available|
Yes, it is regulated by the UK's Financial Conduct Authority (FCA) for UK clients, by the Federal Financial Supervisory Authority (BaFin) for German & Austrian clients, by the Cyprus Securities and Exchange Commission (CySEC) for other EEA clients, by the Dubai Financial Services Authority (DFSA) for Middle-Eastern clients, by the Australian Securities and Investments Commission (ASIC) for Australian clients, by the Capital Markets Authority of Kenya (CMA) for African residents and by the Securities Commission of The Bahamas (SCB) for all other clients.Is Pepperstone regulated?
74-89% of retail CFD accounts lose money
Is Pepperstone safe?
On August 6, 2020, the company revealed that it had been the subject of a data leak. Hackers used malware to compromise a computer used by an external service provider of Pepperstone.
Pepperstone reassured clients that no potential harm could come to their trading account or funds held with the company, although their name, contact details and date of birth may have been accessible by the hackers. While this incident is concerning, we note that security measures were in place and the company detected the intrusion and has also duly informed their customers.
When looking at safety, we highly advise you to check these two factors:
- how you are protected if something goes wrong
- and what the background of the broker is.
How you are protected
If something goes wrong with Pepperstone:
- clients based in the UK will be protected by the UK's investor protection fund up to £85,000
- clients from Germany and Austria can get back 90% of their claims on securities, but not more than €20,000 & 100% up to € 100,000 on cash claims (as per BaFin rules)
- clients from other European countries (EU and EEA countries) are protected by the Cyprus Investor Compensation Fund (ICF), up to €20,000
Unfortunately, clients outside the EU and the UK won't get any kind of protection.
|Country of clients||Protection amount||Regulator||Legal entity|
|Germany, Austria||€20,000||BaFin||Pepperstone GmbH|
|Other European countries||€20,000||CySec||Pepperstone EU Limited|
|Middle-Eastern countries||No protection||DFSA||Pepperstone Financial Services Limited|
|Australia||No protection||ASIC||Pepperstone Group Limited|
|African countries||No protection||CMA||Pepperstone Markets Kenya Limited|
|All other clients||No protection||SCB||Pepperstone Markets Limited|
Pepperstone provides negative balance protection for forex spot and CFD trading, but only for retail clients from the UK, Australia and the European Union (the latter includes all European Economic Area countries like Norway too) and Middle-Eastern countries onboarded through their DFSA licence. Professional clients on the other hand are not covered by negative balance protection.
Pepperstone is an Australian private company established in 2010. A longer track record means the company has successfully navigated periods of crisis or uncertainty in the financial sector. A good example is how Pepperstone handled the Swiss franc crisis in 2015.
During the 2015 Swiss National Bank-related forex crisis, Pepperstone was able to avoid losses by using foresight and its high-speed technology. Before the crisis, Pepperstone warned against possible dangers, discouraging clients from taking excessively leveraged positions on the franc. They accomplished this through enforcing position caps and limiting the leverage on affected accounts. For clients who were exposed through open positions, Pepperstone’s systems liquidated these positions, thus helping them avoid their balance going into negative.
On the other hand, you may have some trouble if you are looking for more information about Pepperstone. Transparently disclosed financial information is quite limited compared to other brokers. It is also difficult to find out who the owners are.